How to ensure the world’s food supply

ByGreg Page

August 2, 2012

Greg Page is chairman and chief executive of Cargill, an international producer and marketer of food, agricultural, financial and industrial products and services.

In America’s heartland, farmers are making the agonizing decision to plow down cornfields that have succumbed to the worst drought in decades. The parched land, resulting lower yields and already tight grain stocks remind us that we can’t take food production for granted. They also raise the question: Can we feed a world on its way to 9 billion people, given weather events, pressure on natural resources and changing diets? At Cargill, we believe the answer is yes. But leaders in government, business and civil societies need to take into account three key imperatives to create a more food-secure world.

First, we need to honor comparative advantage and engage in trust-based free trade. The world’s farmers are producing an all-time record level of calories. But this bounty is not evenly distributed nor evenly available. The world will always raise the most food in the most economical fashion — with a better environmental footprint — if every farmer plants the right crop for his soil and climate and then freely trades with others.

Although food security is a complex issue, this fundamental economic principle is simple. It recognizes that fertile soil, abundant rain and plentiful sunshine are not equally available across our planet. If every country on Earth tried to pursue self-sufficiency, there would be less food. The role of trust-based free trade becomes increasingly important if we are going to exploit the law of comparative advantage.

We also need to revisit our biofuels policies. The use of agricultural feedstocks — including corn, soy and sugar cane — in the production of biofuels is projected to grow, largely driven by legislative mandates and support policies. By 2020, according to the Food and Agriculture Organization, biofuels will consume 13 percent of global coarse grain production and 15 percent of vegetable oil production. The biofuels industry has moved from an insignificant consumer of grain to a significant one in 10 years.

Clearly, we have diverted more of our crops to the production of biofuels. Less well recorded is the positive impact of biofuels on improving economics so that farmers are willing to grow more food. But farming is an outdoor activity, and mandates don’t take into account issues that disrupt supply, such as the current drought. We need to move to more market-driven biofuels policies, not inflexible mandates, subsidies and tariffs. Where such mandates exist, we need to carefully consider using mechanisms to lift them or ease them in times of market stress. We need to engage in an honest discussion about balancing food and fuel and make biofuels more responsive to shifts in supply and demand.

Finally, we have to make Africa part of the solution. Africa represents about 60 percent of the potentially available cropland in the world, and it is well suited to harvest the fruits of photosynthesis. It is critical to feeding the planet’s growing population. But its agricultural productivity is the lowest in the world. The challenges seem overwhelming: unclear property rights; limited access to fertilizer, quality seed and mechanized equipment; inadequate roads and storage facilities; lack of market institutions and prices that encourage farmers to invest in their operations year after year.

For Africa to feed itself — and help feed the world — the issue of price adequacy is crucial. Today, there is more momentum than ever to tackle these issues. Under the Group of 8’s New Alliance for Food and Nutrition Security, and the Grow Africa partnership, companies, nongovernmental organizations and African governments are working to develop sustainable markets for food grown on the continent. Cargill is among the companies anxious to explore a different approach to helping Africa. We are involved because we recognize that global food security cannot be achieved without closing the agricultural productivity gap between Africa and the rest of the world.

Although the three imperatives presented here are only part of the solution, they would move us in the right direction. To ensure food for all, we need to increase agricultural production by about 70 percent in the next four decades. Although that seems like a daunting statistic, at Cargill, we believe it.

We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.